I suspect this is here and I did not notice but just in case:
ech Week
E-Commerce Euphoria Continues,
With Amazon Taking Center Stage
By JASON FRY and TIMOTHY HANRAHAN
THE WALL STREET JOURNAL INTERACTIVE EDITION
JUST IN CASE anyone had doubts, the week's news showed exactly why
Amazon.com Inc. is the poster child for e-commerce.
Take your pick of stories: There was the strong sales report that wasn't strong
enough for the superheated stock's investors, the fact that a price target viewed
by many as crazy just a month ago now looks conservative, or the euphoria
that greeted the news that (drum roll) a warehouse had been leased.
All those stories hit this week and ensured that the Seattle e-commerce giant
remained solidly in the white-hot spotlight cast by Internet investors whose
love for the stock knows no limit.
First came Amazon's announcement that its fourth-quarter sales totaled $250
million, more than triple the year-earlier level (see article).
That news initially pushed Amazon's stock down, as highly informal talk had
been making the rounds that Amazon's sales for the period might hit $300
million. But then analysts pointed out that while Amazon might not have hit its
whisper numbers (more like shout numbers, given the Internet hysteria of
late), the company had far surpassed the analysts' public estimates. Nationsbanc
Montgomery Securities' Steve Horen, for one, said he'd been looking for $187
million in sales.
Amazon cautioned that the robust sales wouldn't translate into
"correspondingly lower net losses" for the quarter, but that fact, of course,
didn't trouble investors -- after all, Amazon has never reported a profit, and
isn't expecting one anytime soon. More to the point was the company's
announcement that it added more than a million new customers in the holiday
season.
The week also saw Amazon's previously announced 3-for-1 stock split go into
effect, bringing the company's stock price down (at least initially) into the
$120s Tuesday, which is barely out of the troposphere for tech stocks these
days.
A day later, Amazon climbed again -- and hit a milestone in doing so. On a
split-adjusted basis, the stock was trading above $400, above the controversial
price target set by CIBC Oppenheimer Corp. analyst Henry Blodget in
mid-December.
Mr. Blodget's price target was assailed as hopelessly optimistic by some other
analysts when he made it; Merrill Lynch countered by saying Amazon should
be at $50 pre-split. That recent but now-forgotten contretemps (see article)
had prompted Mr. Blodget to clarify that his prediction was for a one-year
period -- and not for, say, 14 trading days, which is how long it took Amazon
to hit the mark.
And Amazon wasn't done. On Friday, shares surged as high as 199 1/8, thanks
to news that the online retailer had ... leased a distribution facility in Nevada.
A late sell-off sent it back down to 160 1/4, giving it a gain for the week of
49%.
That the stock initially rallied Friday on news of a new warehouse wasn't quite
as funny a reason as it first sounded: Having the facility will reduce shipping
times and let it stock more products, key factors if the company is to increase
its margins and thereby ease analysts' worries about its long-term profitability.
But let's be honest: Does anyone really believe that all those individual
investors in love with Amazon pondered how 322,560 square feet in Fernley,
Nev., would ease Amazon's margin problems? Of course they didn't: They saw
that the Internet meal ticket bar none had done something -- anything -- and
leapt at the chance to buy more.
"It happened a little faster than we thought it would," Mr. Blodget said after
Amazon hit his price target, adding that Amazon stock isn't going to go
"straight up forever."
And he's right, of course. At the moment, true, Amazon looks like that it
might hit Mr. Blodget's one-year target without even worrying about niceties
like a 3-for-1 split. But that's madness.
Isn't it?
* * *
News from another Internet powerhouse -- America Online Inc. -- wasn't
exactly going to dissuade the Amazon true believers, as the online service
gleefully announced that its members spent $1.2 billion shopping online during
the holiday season.
E-commerce estimates, to be sure, are a dime a dozen, but AOL's estimate
meant its subscribers alone spent more in 1998's holiday season than Jupiter
Communications estimates all online shoppers spent in 1997's holiday season.
And 1.25 million of those shoppers were buying over the Net for the first
time, the company said.
That's impressive -- and so was AOL's breakdown of what those shoppers
were buying. In 1996 -- the first time AOL kept track of online sales -- its
members were mostly interested in computer products. But since then, AOL
said, the focus has turned to apparel and toys (see article).
In other tech news: |
